Instacart Says Consumers Don’t Shop Channels, They Shop the Experience

Retailers’ success depends on seamless, intuitive shopping experiences that keep customers engaged.

But as a trio of payments executives told PYMNTS in a recent discussion, many retailers aren’t sure they’re up for the challenge.

The panel included ACI Worldwide Global Omnichannel Payments Leader Dan Coates, Instacart VP and GM of Connected Stores David McIntosh and Co-op Group Head of Payments Paul Fletcher.

As Coates noted, pre-COVID, firms such as ACI had been talking to merchants about the need to bring payments and their customer journeys online. There was a bit of hesitation in the mix, on the part of the retailers, as they were worried that — in his words — “they’d leave their customers in the dust.”

Then, of course, COVID forced all consumers to undergo a digital transformation of their own. By way of example, PYMNTS’ own research shows that 87% of consumers used digital features and devices as they conducted their retail transaction, whether buying online to pick up in store, pay in aisle or through the traditional checkout lane.

“Now the merchants are struggling to keep up,” Coates said. As economies reopen, things have changed. Omnichannel is not even the right word anymore, said Coates — we’re moving into a period of convergence, where payments must be unified, and all manner of online and offline activities must converge together.

That’s no easy task. As Co-op’s Fletcher noted, “Whether it’s the CEO or the CTO or the ‘techies,’ you’ll get different responses about the digital transformation … and the challenge is having a consistent approach and consistent customer experience.”

Instacart’s McIntosh noted that consumers have valued the personalization of the online experience, but now enjoy the in-store setting too. He noted that Instacart’s retail partners are finding that the platform is becoming an ever-larger part of their businesses — and that about a third of these merchants’ transactions will be done online in just a few years. Grocers, he said, are searching for a way to improve the instore experience.

Instacart, for its part, has in recent months introduced new technologies to forge “connected stores” with technology that lets customers scan and pay for items as they shop.

In addition, the Caper Cart enables customers to take their digital shopping lists into a grocer or retailer, sync the app to the cart and “checks off” items as they’re added. Separately, the company has also introduced Carrot Tags, where users can select an item on their phone and the corresponding shelf label will flash in-store, to help users find desired items more easily.

That interaction, he said, helps drive a personalized experience within the brick-and-mortar setting.

“Customers are not simply thinking about things as in store vs. online,” McIntosh said. “They want the same experience in both places.”

Friction- and Fraud-Free

No matter the channel or the setting, said Coates, all merchants must capture payments in as friction-free environment as possible, garnering consumer trust and blocking fraudsters all at the same time.

Consumers now want their PayPal, available online, to be there at in-store checkout. If loyalty points are redeemable online, so should they be a feature in-store.

“When you think about this from a merchant’s perspective,” Coates said, “it’s important to have a payments orchestration platform in place, where you can build on and add more payments, across all channels.” If that convergence is done well, Fletcher said, even the most necessary, basic commerce experience — in this case, shopping for groceries — can become an engaging customer experience. (Co-op, for its own part, has its pay-in-aisle functionality, too.)

Data is the Critical Component

Data underpins it all, said the panelists, and helps retailers respond to customers’ shifting tastes in real time.  And, as Coates stated, payments orchestration can help provide a unified, single view of consumer-level information, rather than relying on several providers.

“You want to be able to see that a customer went into the store, opened up their phone, then used the [retailer’s] app, looked for a product, checked out online — and maybe made an order later that day through the website,” Coates said.

Payments are also a critical component as retailers and grocers meet consumers online and offline.  Coates remarked that consumers are becoming increasingly comfortable with using digital wallets in everyday commerce. ACI, he said, this month introduced its Wallet Hub, which lets merchants access 200 digital wallets in more than 70 countries. Fletcher said that in Europe, SRC, click to pay and tokenization help eliminate the pain points of entering 16-digit card, PAN and CVV data.

“These are all things that merchants want,” Coates said of a uniform, consistent payments experience (and fast settlement of funds), “and the consumers want it too. We know that more than 50% of consumers in the past year have used the wallets — and they like the convenience.”  Merchants benefit, too, he said, as they have access to their money right away. Real-time payments are on the horizon, and merchants will need to get ready.

“We are in a world of payments explosion,” Coates said. “and even if you are a retailer that evaluated their payment solution just a few years ago, there's so many things that have changed. And unless you have a really solid foundation, by having a payments orchestration platform, you’re going to be left in the dust.”

And looking ahead, said Instacart’s McIntosh, “the online and in-store experience is really going to unify. Four or five years from now, customers will really think about this as ‘one’ experience.”